FESCO VS FEDERATION OF PAKISTAN, 2014 PTD-LAHORE-HIGH-COURT-LAHORE 1549 (2013)

Sales Tax Act (VII of 1990)---

----S.48(I)(ca)---Constitution of Pakistan, Art. 199---Constitutional petition---Recovery during restraining order---Grievance of petitioner was that authorities made recovery of demand notice from its bank accounts despite issuance of restraining order by Appellate Tribunal---Validity---Notices under S.48(I)(ca) of Sales Tax Act, 1990, were issued on 11-9-2013, and authorities on the same day ensured its compliance by respondents---Undue haste was demonstrated on the part of authorities to recover amounts from petitioner---Authorities acted in total disregard of orders passed by Appellate Tribunal and due process---High Court directed the authorities to look into the matter and to ensure that such an act was not repeated---High Court further directed the authorities to refund amounts recovered from accounts of petitioner by authorities as the same were illegal---Petition was dismissed in circumstances.

Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others 1999 PTD 1982 rel.

Mian Ashiq Hussain for Petitioner.

Mian Asif Hashmi for Respondents Nos. 2 to 6.

Mansoor Baig for Respondent No.9.

Date of hearing: 3rd December, 2013.

JUDGMENT

MRS. AYESHA A. MALIK, J.---Through this petition, the petitioner has impugned the recovery of Rs.90,471,388, Rs.107,217 and Rs.43,920 by the respondents Nos.2 to 6 as the same were made during the pendency of a stay order issued by the Appellate Tribunal on 11-9-2013.

2.The case of the petitioner is that show-cause notices were issued to him on 19-2-2013 and 2-4-2013. Replies of the same were made by the petitioner on 26-2-2013 and 17-4-2013 respectively. Thereafter, the order-in-original was passed on 25-4-2013, which culminated into a demand of Rs.6,888,265,303. The petitioner filed an appeal against the order-in-original before the Commissioner Inland Revenue (Appeal), Faisalabad. Against the order in appeal dated 16-8-2013, the petitioner filed an appeal before the Appellate Tribunal. Thereafter, the respondents Nos.2 to 6 issued recovery notice under section 48(1)(ca) of the Sales Tax Act, 1990 (Act, 1990) to the petitioner on 3-9-2013. The petitioner moved a miscellaneous application seeking a restraining order against the respondents for the recovery of any amount during the pendency of the appeal before the Appellate Tribunal. On 6-9-2013 the Appellate Tribunal heard the petitioner and granted a stay against the recovery to the petitioner. The respondents Nos.2 to 6 notwithstanding the order of the Appellate Tribunal dated 6-9-2013 pursued the recovery proceedings and sought recovery of amounts of Rs.90,471,388, Rs.107,217 and Rs.43,920 from the respondents Nos.7, 8 and 9.

3.The grievance of the petitioner is that the respondents Nos.2 to 6 could not have pursued the recovery on account of the stay order issued on 6-9-2013. Learned counsel for the petitioner argued that respondents Nos.2 to 6 pursued the recovery proceedings notwithstanding the stay order of 6-9-2013 and the respondents Nos.7, 8 and 9 complied with the request of the respondents Nos.2 to 6 issued on 11-9-2013 to attach all the bank accounts of the petitioner notwithstanding the stay order of 6-9-2013. He further argued that the stay order of 6-9-2013 was made in the presence of the respondents and therefore there was no justification for pursuing the recovery and attaching the bank accounts of the petitioner. Learned counsel further argued that when the respondents Nos.2 to 6 approached the respondents Nos.7, 8 and 9 on 11-9-2013, they did not give the stated respondents any time to confirm from the petitioner whether or not any stay order has been issued in favour of the petitioner and instead compelled the respondents Nos.7, 8 and 9 to facilitate the recovery proceedings by attaching the bank accounts and issuing pay orders in favour of the respondents Nos.2 to 6. Learned counsel argued that such an act on the part of the stated respondents is illegal and in defiance of an order issued by the Appellate Tribunal. Further argued that respondents acted with mala fide intent in total disregard of the order of Appellate Tribunal and so the petitioner is entitled to immediate refund of amounts so recovered.

4.Report and para wise comments on behalf of respondents Nos.7, 8 and 9 have been filed. In terms of the report and para wise comments filed by the stated respondents and the arguments made by the learned counsel for the respondent No.9, the respondents Nos.2 to 6 contacted the respondent No.9 on 11-9-2013 and immediately required that two pay orders in the amount of Rs.18,885 and Rs.25,085 be issued in favour of the Officer Inland Revenue, Regional Tax Office, Faisalabad. Learned counsel argued that respondent No.6 did not give any time to the respondent No.9 to contact the petitioner or to confirm whether any stay order has been issued in favour of the petitioner. The respondent No.9 in compliance with the recovery notice under section 48 (I)(ca) of the Act, 1990 made two pay orders and handed them over to the respondent No.6. In terms of the report and para wise comments filed by the respondent No.7, the respondent No.6 issued notice under section 48(I)(ca) of the Act, 1990 for the attachment of the bank accounts of the petitioner maintained with the respondent No.7. The respondent No.6 served the respondent No.7 with notice on 11-9-2013 and required immediate compliance. As per the report and para wise comments filed by the respondent No.7, the respondent No.6 raided the respondent Bank with armed personnel, waving handcuffs and creating harassment so as to effectuate compliance of notice issued under section 48 (I)(ca) of the Act, 1990. On the same day, immediate compliance was made, the accounts were attached and a cashier cheque in the amount of Rs.5,113,805 was issued to the respondent No.6.

5.Report and para wise comments have been filed by the respondents Nos.2 to 6. Learned counsel for the respondent No.6 argued that even though the stay order was passed on 6-9-2011, it was communicated to the respondents Nos. 2 to 6 in the later hours of 11-9-2013 and was informed to the respondent No.3 on 12-9-2013. Since the stated respondents did not have any knowledge of the stated order of 6-9-2013, hence they acted totally in accordance with law and have in no manner violated the order of 6-9-2013. Learned counsel argued that no harassment was made to the respondents Nos.7, 8 and 9 for recovery. He argued that in terms of the procedure under the Act, 1990 due process was followed as no valid stay order was served upon the respondent No.6. He further argued that now the proper course for the petitioner is to file an application before the respondent No.3 for refund of any amount which feels that it is entitled to. Learned counsel argued that petitioner is not entitled to the relief claimed before this Court as no order for refund can be made.

6.Heard learned counsel for the parties and reviewed the record available on the file.

7.The basic issue before this Court is whether the recovery made by the respondent No.6 from the respondents Nos.7, 8 and 9 pursuant to notices issued on 3-6-2013 were legal recoveries? The basic case of the petitioner is that the said recovery was made during the subsistence of a stay order issued by the Appellate Tribunal on 6-9-2013. The pendency of the appeal and the issuance of stay order of 6-9-2013 by the Appellate Tribunal is not denied by the respondents Nos.2 to 6. The case of the respondents Nos.2 to 6 is primarily that they had no knowledge of the stay order and that the stay order would be effective when communicated to the respondents. Since they had not been served with the stay order, hence it was not effective and therefore, the recovery made on 11-9-2013 in the amount of Rs.90,471,388, Rs.107,217 and Rs.43,920 is in accordance with law. A review of the order dated 6-9-2013 shows that the respondents were present before the Appellate Tribunal on that day. Mr. Muhammad Jameel Bhatti DR was present before the Appellate Tribunal and this fact is not denied by the respondents Nos.2 to 6. Therefore, the basic contention of the respondents Nos.2 to 6 that they had no knowledge of the order of 6-9-2013 or that they were not served with the order of 6-9-2013 is factually incorrect. The stay order was made in the presence of the respondents, Hence they had knowledge of the order of 6-9-2013. The respondent No.6 notwithstanding the order of 6-9-2013 pursued the recovery proceedings and ensured recovery on 11-9-2013 through the bank accounts of the petitioner maintained with the respondents Nos.7, 8 and 9. To my mind this act of the respondent No.6 is in gross violation of a stay order issued by the Appellate Tribunal and therefore, is totally illegal. The respondent No.6 could not have continued with the recovery process when the recovery proceedings had been specifically stayed for a period of 30 days by the Appellate Tribunal. The respondents Nos.2 to 6 have no justification whatsoever to state that they had no knowledge of the order of 6-9-2013 when Mr. Jameel Bhatti DR was present before the Appellate Tribunal on 6-9-2013. Hence the order of 6-9-2013 was served upon the respondents and duly communicated to them. Learned counsel for the respondents Nos.2 to 6 argued that Mr. Jameel Bhatti DR did not inform the stated respondents, hence they did not know about the order of 6-9-2013. If that is the case, then it is an internal issue between Mr. Jameel Bhatti DR and the respondents Nos.2 to 6 for which the petitioner should not be made to suffer. The argument of the learned counsel for the respondents Nos.2 to 6 that the petitioner should now move an application for refund of the amount is also totally misconceived for the reason that the recovery itself was illegal and there is no reason for the petitioner to move an application before the respondents for refund of amounts illegally recovered. Learned counsel for the respondents Nos.7, 8 and 9 have stated in their report and para wise comments and argued before this Court that respondent No.6 caused immense pressure on the stated respondents to effectuate the recovery from the bank accounts of the petitioner without allowing them to complete their due process in order to comply with the demand made under section 48(I)(ca) of the Act, 1990. The Hon'ble Supreme Court of Pakistan in the case titled "Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and 4 others" (1999 PTD 1982) has condemned the extra ordinary zeal shown by the respondents for the recovery of amounts from the appellant on the ground that an impatient department with a view to achieving a target of recovery of revenue also reflects upon the mala fide of their demand. In the instant case, the notices under section 48(I)(ca) of the Act, 1990 were issued on 11-9-2013 and the respondent No.6 on the same day ensured its compliance by the respondents Nos.7, 8, and 9. This clearly suggests undue haste on the part of the respondent No.6 to recover amounts form the petitioner. Therefore, the respondent No.6 has acted in total disregard of the orders of the Appellate Tribunal and due process. The respondent No.3 is directed to immediately look into this matter and to ensure that such an act is not repeated. Compliance report to be filed within three weeks time through Deputy Registrar (Judicial) of this Court.

8.Therefore, in view of the aforesaid, this petition is accepted. The recoveries made from the accounts of the petitioner by the respondents Nos.7, 8 and 9 in the amount of Rs.90,471,388, Rs.107,217 and Rs.43,920 are illegal and the respondents Nos.2 to 6 are directed to refund the said amount to the petitioner within 15 days of the receipt of certified copy of this order.

MH/F-18/LPetition allowed.